Form CLI-20057 (9/15) Page 1 of 4

cinfin.com

Business Life Insurance

BUSINESS CONTINUATIONProviding an Effective Solution for Your Business Needs

The Cincinnati Life Insurance Company

BUSINESS CONTINUATION

Preparing for the future A business continuation plan provides a structured solution should a business owner or key employee die or become disabled during their working years. As a business owner, consider the following questions.• What would happen to your business if an owner or a key

person dies or becomes disabled?• How would your business be affected if you were suddenly

in business with a deceased owner’s heirs?• If your business partner(s) were to die today, are there

liquid assets to which you have access to immediately buy out a deceased owner’s share of the business?

• How would your business fair if it suddenly had to account for lost revenues and pay the additional costs of hiring and training a new person should a key person unexpectedly die?

If you have a financial interest in a company that could be jeopardized by the death or disability of an owner or key person, then a business continuation plan funded with life insurance should be part of your long-term strategy.

An effective business continuation plan is one that:• creates a market for a deceased owner’s share of the business• establishes the price and terms of the sale• provides the cash needed to complete the purchase• ensures that control of the business passes to the

proper person(s)• offsets losses resulting from the absence of a key person

Knowing the facts• One in three family-owned businesses don’t have a plan in

place (LIMRA, 2012).• 48 percent of small to midsize firms are unprotected if an

owner or key executive dies (LIMRA, 2012).• Four in 10 continuation plans are arranged through a

buy-sell agreement or stock redemption plan, four in 10 through a trust arrangement, and two in 10 through a will (LIMRA, 2012).

Form CLI-20057 (9/15) Page 2 of 4

Consider this information collected from the Commissioners 2001 Standard Ordinary Mortality Table showing the probability of one owner’s death before retirement age based on a three-owner business:

Probability of one death prior to age 65 Owner ages % of Males % of Females

30-30-30 44.8 29.9 30-35-40 43.5 29.0 30-40-50 40.9 27.1 35-35-35 43.6 29.1 35-40-45 41.7 27.8 35-45-55 37.6 24.8 40-40-40 42.0 28.0 40-45-50 39.0 25.8 45-50-55 34.8 22.8 50-55-60 27.9 18.1 55-55-55 28.9 18.7

The life insurance solutionProtect the value of your ownership interest A formal buy-sell agreement funded with life insurance provides the surviving owner(s) the funds needed to pay fair market value for the interest of the deceased owner.

It’s important to put a formal buy-sell agreement in place and monitor it as your business and its value change over time. Although it’s best to have a buy-sell agreement in place when the company is initially formed, one can be created at any time and modified as business strategies and ownership structure changes or the valuation formula changes.

Benefits of creating a buy-sell agreement funded with life insurance

Benefits to the heirs of the deceased owner Benefits to the surviving business owner(s)

Receive a fair value for their ownership interests A fair and agreeable plan is in place to minimize the negative effects to the business

Cash is immediately available for the buy-out Prompt and orderly transfer of the business interest

May establish the value of the business for estate tax purposes Control of the business remains in place without interference from the deceased owner’s family

Relief from worries regarding the business and its creditors Minimizes the effects of an unexpected change in ownership

Alleviate the potential of being involved in a business for which they have little knowledge or interest

Minimizes the potential for lengthy and costly legal negotiations

There’s peace of mind in knowing that you have a plan in place to preserve the value of your business interests.

Protect your business from the loss of a key personThe death of a person who is key to the long-term success of your business can create a tremendous financial burden. Consider the costs associated with replacing lost revenue, having fewer human resources and hiring and training a replacement.

Life insurance benefits can help cover the costs associated with the death of a key person. It provides the business an immediate liquid asset to be used in any way the business so chooses to mitigate the potentially devastating effects of such a loss.

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This is not a policy. For a complete statement of the coverages and exclusions, please see the policy contract. All applicants are subject to underwriting approval. Products available in most states.

Copyright © 2015 The Cincinnati Life Insurance Company. All rights reserved. Do not reproduce or post online, in whole or in part, without written permission. 6200 S. Gilmore Road, Fairfield, OH 45014-5141.

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About Cincinnati LifeThe Cincinnati Life Insurance Company stands among the top U.S. life insurers with a high financial strength rating from A.M. Best Co., an independent provider of insurance ratings since 1899. Through one of its predecessor companies, Cincinnati Life has more than a century of experience serving policyholders. A wholly owned subsidiary of The Cincinnati Insurance Company, Cincinnati Life was formed in 1988 when The Life Insurance Company of Cincinnati merged with Inter-Ocean Insurance Company. Please view cinfin.com for current information about Cincinnati Life and its financial strength ratings.

For more information, please contact your local independent agent recommending coverage.

Form CLI-20057 (9/15) Page 4 of 4